CMS Energy Posts Solid 1Q Earnings

Zacks

Mich.-based CMS Energy Corporation (CMS) announced first-quarter 2013 earnings per share of 53 cents on both adjusted and GAAP basis, beating the Zacks Consensus Estimate of 46 cents. Earnings were 43.2% higher than 37 cents earned in the year-ago quarter.

A colder-than-normal weather spiked natural gas deliveries, driving better-than-expected results in the reported quarter.

Operational Performance

Operating revenues of CMS Energy in the quarter under review grossed $1.98 billion, up 13.5% year over year. Results were better than the Zacks Consensus Estimate of $1.85 billion.

Operating expense in the quarter rose 6% year over year to $1.65 billion.

The magnitude of increase in revenues more than offset the magnitude of increase in expense, thereby providing a 75% surge in operating income in the reported quarter.

Net income of CMS Energy more than doubled to $144 million in the reported quarter.

Financial Position

CMS Energy ended the first quarter with cash and cash equivalents of $586 million, surging from $93 million at the end of full year 2012. Total debt, capital and finance leases rose to $7.50 billion, up 1.6% from 2012 end level. The company generated cash flow from operations of $725 million, up 14.2% year over year.

Business Highlights

Consumers Energy, principal subsidiary of CMS Energy's principal subsidiary, intends to invest about $7 billion in its operations through 2017. This in turn will also aid in creating jobs in Mich.

The company has also inked $600 million multi-year contracts with other Mich. businesses as a part of its Pure Michigan Business Connect commitment. These contracts are in addition to the $2.4 billion annual spending agreement by Consumers Energy with Mich. companies.

The company lowered natural gas fuel prices by about 15%, which supported its increment in investments to strengthen and expand its natural gas system. It intends to invest $160 million over the next five years on new gas customers, who elect to switch from other fuel sources.

Guidance

CMS Energy affirmed its guidance for full year 2013 adjusted earnings in the range of $1.63–$1.66 per share. This is consistent with the company's long-term plan of 5%–7% annual earnings growth.

Other Stocks to Consider

CMS Energy carries a Zacks Rank #3 (Hold). Other stocks to consider are Brookfield Infrastructure Partners L.P. (BIP) , Pike Electric Corporation (PIKE) and Huaneng Power International, Inc. (HNP) , all carrying a Zacks Rank #1 (Strong Buy).

 

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